If Two Variables Were Perfectly Correlated, the Correlation Coefficient R

question 83

Multiple Choice

If two variables were perfectly correlated, the correlation coefficient r would equal

• A) 0
• B) -1
• C) 1
• D) B or C
• E) none of the above

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Definitions:

Total Surplus

The sum of consumer surplus and producer surplus, representing the total benefit to society from the production and sale of a good or service.

External Benefits

Positive effects of a production or consumption activity on third parties not directly involved in the transaction, leading to social or economic benefits.

Total Surplus

The sum of consumer and producer surplus, representing the total net benefit to society from a market transaction.

Socially Efficient Quantity

The level of production of a good or service that results in the optimal combination of economic efficiency and social welfare.